Posts tagged ‘DOE’

About 700 million barrels of crude oil stored in four sites along the US Gulf coast seems to have recently inspired the imagination of a cash-strapped Congress.

With US crude production nearing record highs and prices falling below $50/b, federal lawmakers are pushing to sell millions of barrels from the US Strategic Petroleum Reserve to fund bills with little, or nothing, to do with energy.

The ongoing US oil boom has compelled some lawmakers and analysts to question the need to keep so much crude stockpiled and sparked speculation that a government sale of tens of millions of barrels could be imminent. But could new rationale for how much crude the US keeps in its Strategic Petroleum Reserve actually increase the amount of crude in the US stockpile?

Hopeful US exporters, eager to tap relatively newfound domestic natural gas abundance into the global market, have long had their projects shepherded into a Department of Energy queue they claim has created years of delays and regulatory risk.

But two recent export proposals may launch unique challenges to that contentious queue and might force agency officials to radically overhaul its approval process.

The Department of Energy’s decision this month to give conditional approval to a Houston-based company to ship even more liquefied natural gas from its planned export facility appeared to be exactly what many in the industry had been clamoring for.

But after a close-reading of the DOE’s order and discussions with sources familiar with the issue, the recent approval seems to be far less of a victory for the pro-export crowd. In fact, the approval could be interpreted as an ominous decision from an agency wary of sending US gas into the global market and might signal a DOE decision to severely curtail future export authorizations, at least from the US Gulf Coast.

In May, a high-profile energy analyst and former high-ranking Obama administration official told a standing-room-only shale gas conference that the Department of Energy wouldn’t be ruling on any pending applications to export liquefied natural gas for at least a month, probably longer.

There’s no way the DOE would give the go-ahead to an application before Ernest Moniz was sworn in as the agency’s new head and a review of applications would take weeks, the analyst told the conference with a degree of confidence that was rare in the ongoing gas export debate.

Three days later and before Moniz was sworn in, the DOE gave conditional approval for the Freeport LNG project to export up to 1.4 Bcf/d over 20 years to countries that do not have free trade agreements with the US.

The battle over expanding US exports of liquefied natural gas has long centered on a debate over supply and demand fundamentals: whether exports would cause domestic prices to skyrocket; whether limits would quell US production; or whether the industry may face flat demand without new markets.

But the debate ventured into some new ground recently when the US Chamber of Commerce began ramping up its argument that limiting LNG exports may violate the trade law.

“Export restraints not only violate the letter of US trade law and international trade agreements but also their spirit,” Karen Harbert, president and CEO of the Chamber’s Institute for 21st Century Energy, wrote in a January 24 letter to the Department of Energy. “In fact, export restraints implemented by the United States would likely be emulated by other countries and could easily limit US access to key natural resources that are not readily available from domestic sources, undermining US competitiveness.”

Senator Ron Wyden would appear to have ample reason to support the expansion of LNG exports from the US.

The Democrat and incoming chairman of the Senate Energy and Natural Resources Committee has a proposed LNG export terminal in his home state of Oregon.

The developers and backers of the Jordan Cove Energy Project, which have asked the US Department of Energy for a permit to export LNG to countries that do not have free-trade agreements with the US, say the terminal would create more than 120 much-needed, high-paying jobs and turn Oregon into a lucrative gateway for LNG exports to Asia.

But Wyden has held firm to his opposition of expanded LNG exports, saying the Jordan Cove project and others like it could cause natural gas to trade as a global commodity, similar to oil. That would mean US consumers could expect to encounter volatile swings and price shocks for future natural gas supplies, he has said.

Stop the presses: Qatar, which sits on two-thirds of the world’s biggest conventional gas field in its own territorial waters, has applied with ExxonMobil to the US Department of Energy for a license to export liquefied natural gas (LNG) from Port Arthur, Texas.

In a document received by the department August 17, Golden Pass Products (GPP), a Houston-based joint venture between state-owned Qatar Petroleum and ExxonMobil, seeks long-term, multi-contract authorization to export US-produced LNG to any country with the capability to import the fuel that has or will sign a free trade agreement with the US requiring “national treatment” for trade in natural gas.

As the requirement for blending cellulosic ethanol in the US fuel supply continues to rise, even though it still doesn’t exist in commercial quantities, there is debate over whether the numbers will ever be reached. Not everybody has thrown in the towel, as Meghan Gordon discusses in this week’s Oilgram News column, Regulation & The Environment.

It remains to be seen whether the Department of Energy will again draw corridors where the federal government can expedite the building of new power lines where congestion is a problem. But the DOE is now doing studies to assess the state of congestion in the US, and it has fingered a problem: getting the data it needs.

It shouldn’t be surprising. Power industry structures are different across the US. Even where they are similar to one another, they have different rules and different names for things.